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EMERGING ISSUES IN PROPERTY LAW

ROBERT H. THOMAS*

INTRODUCTION

I am a property lawyer, which means I am a civil rights lawyer


and a human rights lawyer. I say this because, as we all know,
private property is a civil right—and most importantly for today’s
discussion—a federal constitutional right. This is the context that
frames the subject of my portion of the panel at the Fifteenth Annual
Brigham-Kanner Property Rights Conference about emerging issues
in property law.
I’ll be focusing on recent trends in the courts, fitting these trends
into my internal matrix for property rights. That matrix places prop-
erty rights along a continuum ranging from the baseline property
rights—otherwise known as “common law,” “natural law,” “fundamen-
tal principles,” Lockean, “normative” (and what would an academic
conference be without at least one use of the term “normative”?), “re-
statement,” or whatever-you-want-to-call-them property rights—to
state-recognized and state-created property rights.

I. FUNDAMENTAL FEDERAL PROPERTY RIGHTS

The first and most fascinating of the emerging issues in property


law is whether certain property rights are immune from being re-
defined by state law, either by a state legislature or even a state
court.1 The Ninth Circuit recently addressed this question, conclud-
ing that the interest on state retirement accounts is not subject to

* Robert H. Thomas practices with Damon Key Leong Kupchak Hastert in Honolulu,
Hawaii. He received his LL.M. from Columbia University and his J.D. from the University of
Hawaii. He writes about takings and property law at www.inversecondemnation.com. In the
fall of 2018, he was the inaugural Joseph T. Waldo Visiting Chair in Property Rights Law at
the William & Mary Law School. This Essay is a slightly modified version of the remarks he
delivered on “Other Emerging Issues in Constitutional Protection of Property,” at the Fifteenth
Annual Brigham-Kanner Property Rights Conference in Williamsburg, Virginia (Oct. 5, 2018).
1. This is an issue left unresolved by the U.S. Supreme Court in Stop the Beach Renourish-
ment v. Florida Department of Environmental Protection, 560 U.S. 702 (2010). There, only four
Justices acknowledged the fact that certain aspects of how property is defined can only be
altered with the payment of compensation.

113
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a state court’s redefining it out of existence, because interest is a


“core” and “traditional” property right that the state cannot disavow
or define away.2 This was a very Blackstonian approach, one recog-
nized by Justice Marshall in his concurring opinion in PruneYard
Shopping Center v. Robins, where he wrote:

I do not understand the Court to suggest that rights of property


are to be defined solely by state law, or that there is no federal
constitutional barrier to the abrogation of common-law rights by
Congress or a state government. The constitutional terms “life,
liberty, and property” do not derive their meaning solely from the
provisions of positive law. They have a normative dimension as
well, establishing a sphere of private autonomy which government
is bound to respect.3

We have also seen this more recently—although less expressly—in


Murr v. Wisconsin, where eight Justices rejected Wisconsin’s argu-
ment that the State could define and redefine what counts as “prop-
erty” with a free hand.4 The majority in that case instead adopted
a multifactor test for the takings “denominator,” which in reality
defined the property claimed to have been taken as a matter of fed-
eral common law, an interest traditionally defined by reference to
state law.5 The dissenters rejected Wisconsin’s argument that state
law alone defined the property, concluding that even though a state’s
metes and bounds is the starting point in the parcel analysis, it isn’t
the only thing to look at.6 In short, one must ask if there are “back-
ground principles of federal law” in the concept of “property.” Like
Justice Marshall, I think so.
That is the first new emerging issue in property law, and the most
important in my view.

2. Fowler v. Guerin, 899 F.3d 1112, 1118 (9th Cir. 2018) (“We then held that there is ‘a
“core” notion of constitutionally protected property into which state regulation simply may not
intrude without prompting Takings Clause scrutiny.’ This ‘core’ is ‘defined by reference to tra-
ditional “background principles” of property law.’”) (citations omitted) (quoting Schneider v.
California Department of Corrections, 151 F.3d 1194 (9th Cir. 1998)).
3. PruneYard Shopping Center v. Robins, 447 U.S. 74, 93–94 (1980) (Marshall, J.,
concurring).
4. Murr v. Wisconsin, 137 S. Ct. 1933 (2017).
5. Id. at 1948.
6. Id. at 1953 (Roberts, C.J., dissenting).
2019] EMERGING ISSUES IN PROPERTY LAW 115

II. STATE-CREATED OR STATE-RECOGNIZED PROPERTY RIGHTS

If there is a federal baseline, the second emerging issue is to ques-


tion what happens when a state recognizes more rights, not less, as
“property.” Before we address this, I want to ask whether anything is
to be made of the fact that the Fifth Amendment is the only provision
in the Constitution that refers to “private property?”7 The other pro-
visions that mention property, such as the Due Process Clauses of
the Fifth and the Fourteenth Amendments, only refer to “property”
without the “private” modifier.8 The following is one recent example
where this distinction may make a difference.
In In re Maui Electric Company,9 the Hawaii Supreme Court held
that the Hawaii Constitution’s provision guaranteeing a right to a
“clean and healthful environment” is “property.”10 But the District
of Columbia Circuit held the opposite in a case involving the Federal
Energy Regulatory Commission. The court interpreted Pennsylvania’s
similar “clean air and pure water” constitutional provision, conclud-
ing that although the provision recognized the right to clean air and
water as “property,” that’s not really a “property” right.11 You can’t sell
it, you can’t exclude others from it, nor is there any value you can
place on it. As the court noted, “Even for entitlements, ‘[t]he hallmark
of a protected property interest is the right to exclude others,’ which
is ‘one of the most essential sticks in the bundle of rights that are
commonly characterized as property.’”12 To the court, it was not truly
property, because it did not fall within the “traditional” concept of
property, and thus was not protected by the Due Process Clause. Are
there any federal baselines?
The provisions in the Hawaii and Pennsylvania Constitutions guar-
anteeing a clean environment are state-created entitlements like
state employment in Board of Regents v. Roth,13 that gives someone

7. U.S. CONST. amend. V (“[N]or shall private property be taken for public use, without
just compensation.”).
8. See id. amends. V, XIV.
9. In re Application of Maui Elec. Co., 408 P.3d 1, 12–13 (Haw. 2017).
10. Id. at 23. For more on the Hawaii case, see Robert H. Thomas, Back to the Future of
Land Use Regulation, 7 BRIGHAM-KANNER PROP. RTS. CONF. J. 109, 117–22 (2018).
11. Delaware Riverkeeper Network v. FERC, 895 F.3d 102, 109–10 (D.C. Cir. 2018).
12. Id. at 109 (quoting Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd.,
527 U.S. 666, 673 (1999)).
13. Bd. of Regents of State Colleges v. Roth, 408 U.S. 564 (1972).
116 PROPERTY RIGHTS JOURNAL [Vol. 8:113

a “legitimate claim of entitlement.”14 This also includes entitlements


such as Kaiser Aetna’s Rivers and Harbors Act Permit,15 the alleged
cultural rights that were asserted by the objectors in the Hawaii
telescope case referred to by Professor David Callies in his panel at
the Fifteenth Annual Brigham-Kanner Property Rights Conference,16
and the procedural rights recently recognized by the Tenth Circuit
when it concluded that a city must inform an affected property
owner when the city declares her property to be blighted.17 In the
latter case, the court concluded that the city’s blight designation did
not have a direct impact on a property in the land (the blight designa-
tion was merely a designation).18 But the lack of notice of the blight
designation did have a direct impact on the property owner’s prop-
erty right to timely appeal the blight designation. Thus, the “property”
for purposes of due process was the state’s procedures.19

III. IS THERE A RIGHT TO HAVE THE GOVERNMENT


PROTECT PROPERTY?

The next emerging issue in property law is whether there is either


a fundamental or federal property right—or a state-created property

14. Id. at 577.


15. Kaiser Aetna v. United States, 444 U.S. 164, 180 (1979) (“While the consent of
individual officials representing the United States cannot ‘estop’ the United States, it can lead
to the fruition of a number of expectancies embodied in the concept of ‘property’ . . .
expectancies . . . .” (citation omitted)).
16. In re Contested Case Hearing re Conservation Dist. Use Application (CDUA) HA-3568
for the Thirty Meter Telescope at the Mauna Kea Sci. Reserve, 431 P.3d 752 (Haw. 2018).
Professor Callies spoke on this case during his panel presentation. David L. Callies, Pre-
sentation on “Government Ownership of Land and the Limits upon Transfers or Sale: The
Public Trust Doctrine,” at the Fifteenth Annual Brigham-Kanner Property Rights Conference
(Oct. 5, 2018). For further discussion from Professor Callies on this topic, see David L. Callies,
The Public Trust Doctrine, 8 BRIGHAM-KANNER PROPERTY RIGHTS J. 71 (2019).
17. M.A.K. Inv. Grp., LLC v. City of Glendale, 889 F.3d 1173 (10th Cir. 2018).
18. Id. at 1189.
19. Id. at 1182 (“Applying this intuitive rule, we conclude due process required Glendale
to provide M.A.K. with direct notice of the adverse blight determination. In contemporary
terms this means notice had to be mailed, emailed, or personally served. Without the minimal
step of actual notice, M.A.K. was left unaware of the potentially looming condemnation action,
and so had little reason to even investigate whether it could challenge the blight determination
that authorizes that action. As a consequence, M.A.K. lost its statutory right to review within
thirty days. In other words, M.A.K.’s ability to preserve its property right in the statutory right
of review depended on its knowledge of the simple fact the blight finding existed.”) (emphasis
in original).
2019] EMERGING ISSUES IN PROPERTY LAW 117

right—to have the government act to protect your property. Profes-


sor Timothy Mulvaney has explored this in his recent work on “non-
enforcement” takings,20 and in the courts we see this played out in
several recent, interesting cases.
The Federal Circuit’s decision in the Mississippi River-Gulf Outlet
case addressed this question of government’s role to protect prop-
erty.21 Prior to reaching the Federal Circuit, the Court of Federal
Claims (“CFC”) held that the United States had taken property be-
longing to Saint Bernard Parish because the Corps of Engineers
constructed—and then failed to maintain—the Mississippi River-
Gulf Outlet Canal. Built decades ago, the channel amplified the effect
of Hurricane Katrina by serving as a bowling alley for the hurricane’s
force—with Saint Bernard Parish and New Orleans’s Ninth Ward
as the pins.22 The CFC awarded a very large compensation verdict,
and the government appealed to the Federal Circuit.23 That court,
in an opinion by Judge Timothy Dyk, reversed the CFC and concluded
that, as a matter of law, the federal government could never be liable
for a taking caused by its inaction24—thus adopting a categorical rule
in a flood case even though the Supreme Court in Arkansas Game25
told the lower courts it wasn’t fond of categorical rules.
We see a state court version of this ruling going the other way in
Maryland, where the court held that a local government’s failure to
enforce its septic tank regulations was the cause of sewage flooding in
a nearby campground.26 The loss due to flooding was held to be a

20. Timothy M. Mulvaney, Non-Enforcement Takings, 59 B.C. L. REV. 145 (2018) (arguing
that takings law should police the government’s decision to not enforce regulations on the
same grounds that it treats affirmative enforcement).
21. St. Bernard Parish Gov’t v. United States, 121 Fed. Cl. 687 (2015), rev’d, 887 F.3d
1354 (Fed. Cir. 2018), cert. denied, 139 S. Ct. 796 (2019).
22. St. Bernard Parish Gov’t v. United States, 121 Fed. Cl. 687 (2015), rev’d, 887 F.3d
1354 (Fed. Cir. 2018).
23. St. Bernard Parish Gov’t v. United States, 121 Fed. Cl. 687 (2015).
24. St. Bernard Parish Gov’t v. United States, 887 F.3d 1354, 1357 (Fed. Cir. 2018) (“We
conclude that the government cannot be liable on a takings theory for inaction and that the
government action in constructing and operating [the Mississippi River-Gulf Outlet] was not
shown to have been the cause of the flooding.”).
25. Arkansas Game & Fish Comm’n v. United States, 568 U.S. 23 (2012) (holding that
government-induced flooding may give rise to a takings claim, even if the flooding is not
permanent).
26. Litz v. Md. Dep’t of Env’t, 131 A.3d 923, 931 (Md. 2016) (“Upon this review, it seems
appropriate (and, in this case, fair and equitable, at least at the pleading stage of litigation)
to recognize an inverse condemnation claim based on alleged ‘inaction’ when one or more of
118 PROPERTY RIGHTS JOURNAL [Vol. 8:113

taking even though it was based on government inaction. We’ve also


seen this same issue playing out in the California litigations and the
resulting inverse condemnation claims resulting from the recent
devastating wildfires in Northern and Southern California.27 Fi-
nally, this question of government responsibility has also arisen in
lawsuits where taxicab medallion owners have sued local govern-
ments for not enforcing the same medallion regulations against ride-
sharing companies.28
To me, these are the most critical issues of “what is property?” and
“what does it mean?” that we should be following.

IV. TWO OTHER ISSUES: JUST COMPENSATION AND COVERING


ALL LOSSES

Two other burgeoning issues are ripe for clarification. The first
concerns just compensation. It has been more than thirty years since
the Supreme Court has given us a just compensation case, and it is
not because the law of just compensation is remarkably clear.29 Two
competing threads in compensation law still have yet to be resolved.
First, is the purpose of the Just Compensation Clause to make an
owner whole—to award the “the full and perfect equivalent for the
property taken”30—or is it simply to pay the owner the fair market
value of the land alone?31 We know what the answer should be (the
former), but the courts just don’t seem to want to address it. The
second burgeoning issue is business losses associated with a taking.
This issue also covers the fees and costs an owner might incur in
defense of her property rights, especially when the government has
lowballed the valuation.

the defendants has an affirmative duty to act under the circumstances. Therefore, we hold,
as a matter of Maryland law, that an inverse condemnation claim is pleaded adequately
where a plaintiff alleges a taking caused by a governmental entity’s or entities’ failure to act,
in the face of an affirmative duty to act.”).
27. See, e.g., San Diego Gas & Elec. v. Pub. Utilities Comm’n, No. D074417 (Cal. Ct. App.
Nov. 13, 2018).
28. See, e.g., Glyka Trans, LLC v. City of New York, 76 N.Y.S.3d 585 (N.Y. App. Div. 2018).
29. See United States v. 50 Acres of Land, 469 U.S. 24 (1984).
30. Monongahela Navigation Co. v. United States, 148 U.S. 312 (1893).
31. United States v. Gettysburg Elec. Ry. Co., 160 U.S. 668 (1896).
2019] EMERGING ISSUES IN PROPERTY LAW 119

V. ONE LAST THING: WHAT IS A “TAKING?”

I cannot leave the discussion without asking the most fundamental


question the Supreme Court has left unresolved: what is a regulatory
taking? It’s been nearly one hundred years since the Court told us that
an exercise of a power other than eminent domain can result in a
taking, but the Court is still not sure what this power looks like. This
was most recently evidenced in the oral arguments in Knick v. Town-
ship of Scott,32 where it appeared that only two or three of the Jus-
tices even understand what an inverse condemnation or regulatory
takings lawsuit means, and what the property owners who raise
those claims really want. Most of the questions to counsel during the
oral argument on October 3, 2018, were scary because they reflected
the Justices’ wrong—and in some cases, bizarre—assumptions.33
I don’t see the Justices comparing apples to oranges but rather
think that they believe they are eating oranges when, in fact, they
have tangerines. Thus, the biggest issue I see is that the majority of
the Supreme Court does not understand eminent domain–law funda-
mentals. Lacking that analytical foundation, they end up operating
under a set of often-wrong assumptions. They assume, for example,
that the inverse condemnation and regulatory takings tangerines
are just like the eminent domain oranges they are used to biting
into. I do not have a lot of confidence in the Court’s ability to lead us
out of this doctrinal wilderness—or, at least, to not make it worse—
after October’s Knick arguments.

CONCLUSION

But enough of doom and gloom—please allow me to end on a more


positive note: hearty congratulations to Professor Stewart Sterk for
a well-earned Brigham-Kanner Property Rights Prize. Welcome to
the pantheon of the greats, Professor Sterk.

32. See Transcript of Oral Argument, Knick v. Twp. of Scott, 138 S. Ct. 1262 ((Jan. 16,
2019) (No. 17-647), 2019 WL 260998.
33. See, e.g., Transcript of Oral Argument at 25, Knick v. Township of Scott, 138 S. Ct.
1262 (Oct. 3, 2018) (No. 17-647), 2018 WL 44776176 (“JUSTICE BREYER: Or we could go into
1331. But Williamson was decided 32 years ago. This is a very complicated area of law. Why
not let sleeping dogs lie? It’s called stare decisis.”).